Brazil’s Tax Reform introduces a new system for assessing IBS and CBS, based on electronic invoices and information consolidated by the Tax Authorities. This model will significantly change how companies calculate and report their consumption taxes.
1. From tax bookkeeping to assisted assessment
Under Brazil’s current tax system, electronic tax documents provide the information used to prepare tax bookkeeping records, which serve as the basis for calculating taxes.
For example, PIS and COFINS are assessed using information consolidated in the EFD-Contribuições, a digital tax bookkeeping system.
The Tax Reform introduces a different approach.
Electronic tax documents will directly feed the IBS and CBS assessment systems, eliminating the need for a subsequent bookkeeping step.
The assessment will be completed by matching tax debits, credits, payments and other information relating to the relevant period.
This process will determine whether the taxpayer has a balance payable or a recoverable balance.
2. The role of electronic tax documents
Under the new system, electronic tax documents will become the primary source of information for calculating IBS and CBS.
They will serve three main purposes:
- Provide the information necessary to calculate the taxes;
- Formalize the tax debits arising from transactions;
- Allow purchasers to claim the corresponding input tax credits.
Any subsequent changes to the original transaction must also be reflected in the assessment.
For this purpose, the system will use instruments such as debit notes, credit notes and specific tax events.
These records will allow cancellations, returns, adjustments and other events occurring after the original invoice was issued to be incorporated into the tax assessment.
3. How assisted assessment will work
Under the assisted assessment model, the Tax Authorities will prepare the initial IBS and CBS assessment based on information received throughout the month.
Rather than starting from a tax return prepared by the taxpayer, the process will begin with information already consolidated by the authorities, including electronic tax documents and records of tax payments.
The assessment period will be monthly.
By the 15th day of the following month, the Brazilian Federal Revenue Service (RFB) and the IBS Steering Committee (CGIBS) will make the assisted assessments available in a uniform and synchronized manner.
The calculation will consider:
- Tax debits arising from transactions during the period;
- Input tax credits available to the taxpayer;
- Recoverable balances carried forward from previous periods;
- Amounts already settled through payments or other legally permitted mechanisms.
The result will be either a tax balance payable or a recoverable balance.
4. How taxpayers can correct the assessment
Although the initial assessment will be prepared by the Tax Authorities, taxpayers will remain responsible for reviewing the information and identifying any discrepancies.
Corrections will be made through positive or negative adjustments to the assisted assessment, rather than through a separate tax calculation prepared by the taxpayer.
These adjustments must be supported by the appropriate electronic tax documents.
For example:
| Situation | Required adjustment |
|---|---|
| Tax debits omitted or understated | Issuance of a supplementary tax document |
| Tax debits overstated | Issuance of the applicable adjustment document or credit note |
| Cancelled transactions | Registration of the cancellation through the appropriate document or tax event |
| Returned goods or cancelled services | Issuance of the applicable credit note or adjustment document |
| Input tax credits improperly claimed | Reversal of the credits, including applicable statutory charges |
Therefore, companies will need to ensure that corrections to their transactions are properly reflected in the electronic tax documentation.
5. Monitoring the assessment
The assisted assessment platform will provide information allowing taxpayers to reconcile their transactions with the amounts considered in the tax calculation.
The system will include specific areas displaying:
- The assessment result and updated tax balance;
- Events recorded during the period, including cancellations and returns;
- Documents and entries still being processed;
- Input tax credits not yet claimed or subject to conditions;
- Unused payments;
- Documents and amounts not included in the assessment.
This structure will allow companies to identify discrepancies between the documents issued or received and the amounts actually considered by the Tax Authorities.
6. Implications for businesses
The assisted assessment model represents a significant change in Brazil’s consumption tax compliance procedures.
Under the current system, companies consolidate tax information through bookkeeping records and subsequently report the resulting calculations.
Under the new system, the Tax Authorities will continuously receive transaction data and use it to prepare the initial IBS and CBS assessments.
Consequently, the accuracy of electronic tax documents will become even more important, since they will directly determine the tax debits and credits included in the assessment.